Reform Bills Aim to Stop the H-1B Engineering and IT Sweatshops

Trump’s upcoming Executive Order and multiple reform bills all aim to stop H-1B Engineering and Information Technology sweatshops in Houston and nationwide. Sweatshop visa abusers certify H-1B positions at labor rates for unqualified skill categories but filling it later with foreign workers qualified for the original position, at the lower pay. Foreign degree holders and students at US universities are eager to work for lower wages in hopes of staying on as a permanent resident. The sweatshop gets the qualified worker for as little as a third of what a US citizen or resident might earn. The proposed merit-based and salary-based visa reforms will halt this abusive sweatshop practice.

For example, a “DESIGN ENGINEER” position is certified as a “COMMERCIAL AND INDUSTRIAL DESIGNERS” (SOC Code 27-1021) position. Commercial and Industrial Designers generally have art degrees and design furniture, point of sale displays and packaging for consumer products. Although this art degree is unqualified for engineering analysis, the position is certified by the US Department of Labor to be paid as low as $20,100/year (FY2016), way below the typical engineering starting salaries of $55K to $65. This exact practice was used 635 times in FY2016 alone (see table).

This under-qualify/overfill abuse is more common in engineering than we might expect. Government computers don’t check to see if the qualifying Standard Occupational Classification (SOC) has any degree requirements generally expected or legally required for the “Job Title” of the applicant, much less the duties they perform on the job. Employers are not required to advertise the positions under the SOC title and there appears to be little shortage of foreign engineers overseas or students at US universities willing to take those jobs.

The “DESIGN ENGINEER/COMMERCIAL AND INDUSTRIAL DESIGNERS” sweatshop practice was used 376 times in FY 2016 by L&T Technology Services Limited of Edison, NJ. Companies in Houston use it as well. It’s all perfectly legal for state licensing boards as long as the position is filled by an actual engineering degree holder. Clients of these firms might be unaware (or might approve) that these firms claim to fill their engineering positions with designers of furniture and beer displays. It saves tens of thousands in salaries and benefits on each position. Meanwhile, society bears the cost of the unemployed.

According to FY2016 data, the lowest paying sweatshop offender is Boise State University, which proposed to pay three engineering professors $17,060 a year. Pay is substandard for many engineering titles (See table of top engineering job titles certified to pay less than $40K/year in FY2016). Most reform proposals include stepped up investigation powers to find and eliminate these abuses.

Early drafts of Trump’s Executive Order indicate he’ll move toward a merit based system of selection from the current lottery and not allow H-1B spouses to work. He’ll also step up investigations of visa abuse, starting with L-1 (employee transfers) but moving on to H-1B later. It’s not clear if the investigations will move past the sweatshops to their clients, as well.

Darryl Issa’s bill will raise to $100K wage and eliminate the Masters’ degree exemption from the count that determines if an employer is “H-1B Dependent Employer”. H-1B Dependent Employers” and “Willful Violators” have to provide the additional attestations/recruitment efforts for “H-1B Exempt Employees.” In FY 2016, this would include 87% H-1B visas nationwide and nearly 90% in Houston in the count.

Senators Chuck Grassley and Dick Durbin, both long-time H-1B reform advocates, reintroduced their bill for revamping the program. The proposed bill would eliminate the lottery system and task the U.S. Citizenship and Immigration Services with creating a "preference system" so that foreign students educated in the U.S. get priority on visas. It would give a "leg up" to advanced degree holders, those being paid a high wage, and those with valuable skills, according to the announcement. Rep. Zoe Lofgren, a Democrat who represents Silicon Valley, has introduced a more comprehensive bill that would award visas based on which employers offer the highest salaries.

These reforms could open up more jobs to US citizens and permanent residents. H-1B abuse is artificially suppressing salaries, keeping qualified applicants on unemployment and discouraging others from trying. Though some sweatshop jobs will follow H-1B visa holders back to their home countries, many jobs will remain close to US clients and be filled locally. The societal costs of the unemployed and underemployed professionals should go down. As a result, things should be looking up for all of us.